The Global Evidence Against Free College

Democratic politicians -- many of them vying for their party's 2020 presidential nomination -- propose free college programs or other major investments in higher education that reflect systems in countries like Finland and Sweden. But an American Enterprise Institute report released Thursday argues that when developed nations dedicate more public resources to postsecondary education, they tend to produce fewer graduates.

The institute's customarily contrarian resident fellow, Jason Delisle, and co-author Preston Cooper, an education research analyst at AEI, compared 35 high-income (gross domestic product per capita above $30,000) member countries of the Organisation for Economic Co-operation and Development, which produces statistics on countries’ total institutional spending, college attainment rates among 25- to 34-year-olds, and government subsidies. The OECD includes almost all large Western and Central European countries, Australia, the Baltic states, Chile, Israel, Japan, New Zealand, North America, Scandinavia, South Korea and Turkey.

Each country makes sacrifices when it prioritizes one aspect of higher education -- attainment rates, institutional spending and government subsidies -- over another, Delisle said, a reality he thinks is often ignored during debates about free college. Politicians in the U.S. like to suggest America can “learn from other countries and take the good parts” of their education systems, without considering the impact subsidized education has on the overall quality and accessibility of college, Delisle said.

“If you have a heavily subsidized system, that leads a country to ration higher education, leading to a system that’s more selective,” Delisle said. “That’s not an egalitarian higher education policy, which a lot of policy makers on the left insist is the case.”

“If you want less college, one way to do that is to make it free,” he said.

Delisle’s interest in researching international spending on higher education was piqued during the 2016 presidential campaign, he said, when Senator Bernie Sanders, the Vermont Independent, began promoting his plan to eliminate the cost of attending public colleges and universities. More recently, on June 24, Sanders announced his College for All Act, which if passed would eliminate tuition at public institutions and subsidize learning with 100 percent government funding -- 67 percent from Washington and 33 percent from individual states.

“[The legislation] makes certain that all Americans, regardless of income, can get the college education or job training they need to secure decent-paying jobs by making public colleges, universities and trade schools tuition-free and debt-free,” Sanders said in a news release.

However, college admissions would become much more competitive if the U.S. could not rely on tuition to fund its institutions, Delisle said, though the goal of free college policy suggestions is to increase the number of students with degrees.

“The whole public university system in Finland has an admissions rate on par with elite U.S. colleges,” Delisle said. “Not quite as selective as Harvard or the [Ivy League colleges], but if you took a Berkeley, or a [University of Virginia] -- imagine if the entire education system of the U.S. had to meet UVA-level test scores.”

In the report, Delisle highlights Finland, which ranks first among the 35 countries in government subsidies provided for tertiary education (international equivalent to an associate degree or higher in the U.S.). Ninety-six percent of Finland’s higher education resources are public, but its attainment rate -- the proportion of citizens ages 25 to 34 with a degree beyond K-12 education -- is less than 45 percent, placing it 25th among OECD countries. South Korea-based higher education, on the other hand, gets about 36 percent of its funding from the government and achieves a 70 percent attainment rate, the highest among OECD countries, according to the report.

The U.S. ranks 31st for subsidies and third when it comes to institutional resources, which is measured as the amount of money -- a combination of government funds and private dollars -- spent on each full-time-equivalent student. These numbers are also adjusted for a country’s GDP per capita, so as not to penalize countries with smaller economies for spending less.

The report praises more investment in higher education from government and private sources as positive, suggesting that “generally, institutions with greater resources have more latitude to offer a high-quality education.” This could bring criticism from “our colleagues on the right” who prioritize spending reductions, Delisle said.

“We gave [spending] a positive spin, and we also gave attainment a positive spin,” Delisle said. “There are definitely people on the right who would say, ‘We have too many people with college degrees and spend too much on higher education.’”

The OECD includes subsidized student loan programs in its spending metrics, so while governments in the U.S., U.K. and Australia are increasingly providing loans and debt forgiveness, that’s not counted as public funding in the report, Delisle said. Instead, student loans are considered individual expenditures on tuition, though they could be paid off by these governments in the future.

Loans should be kept in mind when reading the report, Delisle said, but they don’t have enough impact in the U.S. to shift the country’s ranking, since the government uses more of a “safety net” model for specific groups of students in need. But forgiven loans make up a higher share of Australia’s and the U.K.’s subsidies, which can’t be seen in the OECD data, he said.

There are other contextual differences between countries that are also absent from data in the report, because these differences are vast and difficult to measure, Delisle said. One variance -- countries’ typical age range for college attainment -- could affect how the report is read, said Alex Usher, president of Higher Education Strategy Associates.

While the AEI report analyzes 25- to 34-year-olds who may or may not have degrees, students in Nordic countries tend to start college later and often take breaks from their learning to participate in the labor market, Usher said. Additionally, Nordic countries have a lower wage premium for college-educated adults than the U.S., he said.

“Those countries tend to look fantastic when you look at adult education -- it’s actually adults who are going back and forth and taking breaks” from higher ed, Usher said. “Here, it’s normal at age 25 to have a degree. There, it’s not so normal.”

But this should not discredit the report’s overall findings and purpose: to remind policy makers that importing other countries’ specific higher education models is not as easy as copying and pasting, Usher said.

“What looks like a strong relationship or strong system could have trade-offs later on,” he said. “I think if there’s a Democrat elected into office in 2020, they’re going to need [a reminder] like that.”